ComEd 2015 Annual Report Download - page 392

Table of Contents
Combined Notes to Consolidated Financial Statements—(Continued)
(Dollars in millions, except per share data unless otherwise noted)
Exelon receives a tax deduction based on the intrinsic value of the award on the exercise date for stock options and the distribution date for
performance share awards and restricted stock units. For each award, throughout the requisite service period, Exelon recognizes the tax benefit
related to compensation costs. The following table presents information regarding Exelon’s tax benefits for the years ended December 31, 2015,
2014 and 2013:
Year Ended
December 31,
2015 2014 2013
Realized tax benefit when exercised/distributed:
Restricted stock units $ 30 $ 17 $ 11
Performance share awards 18 11 11
Stock deferral plan — — 1
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Non-qualified stock options to purchase shares of Exelon’s common stock were granted under the LTIP through 2012. Due to changes in the
LTIP, there were no stock options granted in 2013, 2014 or 2015. For all stock options granted through 2012, the exercise price of the stock
options is equal to the fair market value of the underlying stock on the date of option grant. The vesting period of stock options is generally four
years. All stock options expire ten years from the date of grant.
The value of stock options at the date of grant is expensed over the requisite service period using the straight-line method. The requisite
service period for stock options is generally four years. However, certain stock options become fully vested upon the employee reaching
retirement-eligibility. The value of the stock options granted to retirement-eligible employees is either recognized immediately upon the date of
grant or through the date at which the employee reaches retirement eligibility.
The fair value of each option is estimated on the date of grant using the Black-Scholes-Merton option-pricing model. The following table
presents the weighted average assumptions used in the pricing model for grants and the resulting weighted average grant date fair value of stock
options granted for the year ended 2012:
Year ended
December 31, 2012
Dividend yield 5.28%
Expected volatility 23.20%
Risk-free interest rate 1.30%
Expected life (years) 6.25
Weighted average grant date fair value (per share) 4.18
The assumptions above relate to Exelon stock options granted in 2012 and therefore do not include stock options that were converted in
connection with the merger with Constellation during the year ended 2012.
The dividend yield is based on several factors, including Exelon’s most recent dividend payment at the grant date and the average stock
price over the previous year. Expected volatility is based on implied volatilities of traded stock options in Exelon’s common stock and historical
volatility over the estimated expected life of the stock options. The risk-free interest rate for a security with a term equal
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Source: BALTIMORE GAS & ELECTRIC CO, 10-K, February 10, 2016 Powered by Morningstar® Document Research℠
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